Utility Week

22 | 27TH APRIL - 3RD MAY 2018 | UTILITY WEEK Customers Industry briefing Energy Systems Catapult 14 March, Birmingham Smart energy obstacles The Energy Systems Catapult held an industry briefing in Birmingham to debate progress on identifying the obstacles to implementing a smart energy system. Tom Grimwood was there. T he Energy Systems Catapult was cre- ated to help remove the obstacles preventing innovators from bringing new products, services and business mod- els to market. Last month, the body held an industry briefing at its office in Birmingham to examine these hurdles, look at how they can be dismantled, and assess the potential opportunities on offer if they are. One of the main subjects of debate was the governance and regulation of the energy system. Energy Systems Catapult head of innovation Eric Brown said the changes that have taken place over the years have largely been incremental, but the energy system is now undergoing a complete transformation, suggesting the need to rethink governance and regulation. A number of attendees raised concerns that regulation was lagging behind, and potentially stifling, innovation. ABB tech- nology strategy manager Peter Jones said innovators need space to experiment at the "periphery" of the regulatory framework, saying it should "never, ever be in a position where it stops true free market innovation". "We should never be in a position where due to the slowness of the regulations we sti- fle the innovation, because the ultimate aim of innovation is to reduce the cost of energy, which is the primary function of the regula- tor," he added. Open Utility innovation manager Rachel Stanley stressed the importance of early stage testing, citing their experiences devel- oping a marketplace for peer-to-peer trad- ing. She said people's preferences were oen revealed to be quite different from those they expressed themselves. "If you build what people thought they wanted, then potentially you've built the completely wrong thing," Stanley explained. "So the more you can test things early, the more you can know what you're producing will do what you want it to do." Ofgem chief engineer Peter Bingham pointed out how daunting the energy market can be for new entrants: "There's a mass of legalistic codes. There's a mass of licences. There's a large number of different organi- sations dealing in different aspects of data. All that can be difficult for a new entrant to manage." He trumpeted the virtues of Ofgem's regu- latory sandbox, which offers innovators tem- porary exemptions from some regulations "so new ideas can get some traction". At the same time, ABB's Jones warned against going too far the other way and fail- ing to protect consumers against the less desirable effects of innovation, for example the potential increase in inequality as more prosperous, engaged customers are rewarded for helping to balance the energy system. "Be careful what we all wish for here because you could actually unleash some- thing that is potentially not controllable," he cautioned. "We don't want to be in the situa- tion where we stop that freedom because we can't necessarily control it." He said anticipating and preparing for changes ahead of their arrival would help: "If needs be, we should be modelling. We've got so much computing power. We should be able to paint those scenarios and then do the what ifs, just as we do on the networks to keep the lights on." Data privacy Claire Jones, senior policy adviser at the Department for Business, Energy and Indus- trial Strategy (BEIS), had similar fears over data privacy, worrying there could be a back- lash from consumers if regulation failed to keep pace with innovation: "There is a dan- ger consumers could be put off sharing infor- mation before the true potential of data in the energy sector is realised "I think in energy we have to bring con- sumers with us. If we don't, none of this transformation is going to happen… How do we ensure that the appropriate safe- guards are in place to make sure their data is secure, particularly if it contains personal information?" There was agreement that regulation and governance must be agile in order to achieve this careful balancing act. Delegates also suggested there should be more co-operation between the different util- ity regulators, Ofgem, Ofwat and Ofcom. This would, for example, help network operators to roll out the latest communications tech- nologies needed to digitise the power grid. Randolph Brazier, head of innovation and development at the Energy Networks Associ- ation (ENA), additionally called for more cen- tralised co-ordination of the energy system transformation. He said this did not mean a central planner or architect: "It's more some- one putting in place the right incentives to make sure all relevant energy sectors work together in a co-ordinated manner." Another key talking point was digitisa- tion and data. Linda Chandler, smart cities adviser for the Energy Systems Catapult's Future Power Systems Architecture project, described how data was being seen by many as the "new oil". She pointed out that many of the world's biggest companies, Uber and Airbnb for example, are now data-rich but light on physical assets. "We've always thought of data as a cost and now we're starting to think about the profit-making qualities of data," she added. Chandler said the use of data was shi- ing from understanding what happened in the past to monitoring the present and pre- dicting the future. She said it was becoming less siloed and more organised and enabling businesses to move from a linear trading model to one based on platforms. Also up for debate was the changing rela- tionship with customers as new business models emerge around electric vehicles and connected home services. Energy Systems Catapult head of architecture and transfor- mation John Batterbee said, contrary to con- ventional wisdom, customers are willing to engage with energy as long as it is on their own terms. "They will not engage in indus- try speak," he explained. "They do not get kilowatts and kilowatt-hours. But if you use data and you start talking to them in cus- tomer speak of the value of a heated room… then not only do they engage with it, but they become highly demanding."

• Cover